On the surface, today’s monthly budget statement was disappointing: in March the US Treasury brought in total receipts of $216 billion, below the $228 billion last March, versus outlays of a record $392 billion, resulting in a deficit of $176 billion, more than the $167 billion expected, and $68 billion more than the previous year. For the fiscal year through March 31, the total US budget deficit was $527 billion, compared to $459 billion on year ago.
Declining government revenue and long-term costs associated with an aging population are expected to continue pushing up the deficit. Over the past 12 months, the deficit stood at $651.5 billion, compared with $460.6 billion a year ago, an increase of over 40% Y/Y.
On a 12 month run-rate, the US deficit stood at 3.1% of GDP. A year earlier, that figure was a third less, or 2.2%.
More troubling is that in March the US government had its biggest one month outlay ever, spending a record $392.8 billion, $57 billion or 17%higher than a year ago.
The break down of March spending was as follows:
However, the most concerning picture emerges when looking at the annual change in the rolling 12 month total. It is here that we find that, like last month, in the LTM period ended March 31, total federal revenues, tracked as government receipts on the Treasury’s statement, were $3.264 trillion. This amount was 1.3% lower than the $3.31 trillion reported one year ago, and was the fourth consecutive month of declines. This was also the biggest drop since the summer of 2008.
Why is this important? Because as the chart below shows, every time since at least 1970 when government receipts have turned negative on an annual basis, the US was on the cusp of, or already in, a recession. Indicatively, the last time government receipts turned negative was in July of 2008.
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